‘Big Ticket’ Orders Dive 2.2%; Sharp Drop in Transport Sector

Orders to U.S. factories for “big ticket” durable goods plunged a surprising 2.2% in May, the steepest dive in nine months, the government said today.

The Commerce Department said the entire May decline can be accounted for by a precipitous 9% decline in orders for transportation equipment.

It was the biggest drop in new orders since last August, when orders plummeted 2.3%, and followed a 1.8% increase in April.

Economists were surprised by the report. Most had predicted a rise of more than 2% in orders on the strength of two big orders late in May to Boeing Commercial Airplanes Co., one from United Airlines, the other from American Airlines. But those orders apparently were not recorded in the Commerce Department’s preliminary estimate of durable goods.

Excluding transportation, orders increased 0.3%. Excluding just aircraft, overall orders increased 0.6%.

Cynthia Latta, senior financial economist at Data Resources Inc., a Lexington, Mass., forecasting firm, said that, excluding aircraft and defense, order levels are “not half bad.” “I think what we’re seeing is what we want to see, which is continued growth, but maybe some moderation of the pace,” she said. Stronger growth would inject inflation pressure into the economy, she said.